EpiPen backlash comes as consumers pay bigger share

Hammered by consumers and lawmakers angry about its EpiPen pricing, Mylan Pharmaceuticals conceded it hasn't done enough to help the growing number of people in high-deductible health plans afford the lifesaving product.

The EpiPen controversy has injected new fuel into the policy and political debate over drug costs. But it also suggests drugmakers have been slow to adapt to an environment in which millions of Americans who get their health insurance at work or through the Affordable Care Act exchanges must pay thousands of dollars out of pocket before their coverage kicks in.

People with severe allergies depend on the epinephrine auto-injector, the generic term for the device, to save their lives, so it can't ever fail. That risk and the required research, development and testing, has dissuaded potential competitors from entering the market.

Mylan offers free devices to patients who are both low-income and uninsured, as well as a $100-off discount card for eligible patients with private insurance, 80% of whom the company says are able to eliminate out-of-pocket costs. But Medicare, Medicaid and other state and federal government programs, consider most discount cards kickbacks and prohibit their use.

Patients enrolled in a high-deductible plan are still likely to pay more than $500 for an EpiPen two-pack, even with the card. (The injectors are only sold in two-packs in case one dose isn't enough to stop an anaphylactic reaction, per treatment guidelines.)

“Mylan has worked to help patients with commercial insurance pay as little as $0 for EpiPen Auto-Injector using the My EpiPen Savings Card,” the company said. “However, as the health insurance environment has evolved, driven by the implementation of the Affordable Care Act, patients and families enrolled in high-deductible health insurance plans, who are uninsured, or who pay cash at the pharmacy, have faced higher costs for their medicine.”

Mylan said last week that it would raise the discount offer to $300 off the price of an EpiPen pack and double the eligibility threshold of its patient assistance program to 400% of the federal poverty level. That means a family of four making up to $97,200 would pay nothing out of pocket.

Mylan also plans to sell EpiPen directly to patients, in an effort to reduce costs.

But the drugmaker's sudden decision to appease consumers who have high cost-sharing requirements raises the question of whether pharmaceutical companies have fully grasped how many consumers now have high-deductible plans. As the number of people enrolled in such plans grew over the past decade, Mylan steadily raised the price of the EpiPen.

About 24% of workers in employer-sponsored plans were enrolled in a high-deductible plan linked to a health savings account in 2015, compared with 20% in 2014 and only 4% in 2006, according to a survey from the Kaiser Family Foundation and the Health Research & Educational Trust.

Filling an EpiPen prescription, meanwhile, now costs five times what it sold for when Mylan acquired the brand in 2007, despite few changes to the product. (The product was originally sold in single packs, so Modern Healthcare considered the cost of buying two in 2007). Mylan did not respond to a request for comment for this story. In its announcement last week, the company said pharmacy benefit managers, insurers, wholesalers and pharmacies are responsible for 55% of the $608 list price for an EpiPen two-pack.

Stephen Parente, a professor of healthcare finance at the University of Minnesota, said Mylan appears to be pricing its products in a world where high-deductible plans aren't common. “If they basically made the card and their program strictly based off copay, then that would have completely missed the boat on the high-deductible health plan design,” Parente said.

Most drugmakers are pricing their products the same way they have for the past 25 years, he said. That might be partly because early high-deductible plans often didn't include pharmacy as a part of the deductible.

Caitlin Morris, health system transformation program director at the consumer advocacy group Families USA, said Mylan's latest adjustments to its discount programs don't help everyone because they fail to address the underlying price. “We should be reminded that savings cards are just targeted at a small fraction of people that can actually use them and don't do anything to help the vast majority of people who have been affected as these costs have skyrocketed,” Morris said.

The New York Times reported last week that some of the sharpest price increases came just before a generic competitor, Israel-based Teva Pharmaceutical Industries, was expected to enter the market. But Teva's difficulty in gaining approval for a generic alternative and France-based Sanofi's 2015 recall of competitor Auvi-Q because of dosing problems have made it possible for the company to keep its prices high during an extended period without significant competition, Modern Healthcare reported in March.

The rise in high-deductible plans may increasingly expose drugmakers to consumer backlash that can't necessarily be tamed by discounts.

Clare Krusing, spokeswoman for America's Health Insurance Plans, the industry's largest lobbying group, said Mylan has been ignoring the effects of its price increases on insurance premiums. “Mylan shouldn't be surprised patients have more of a cost-sharing responsibility, and that's why they should be more aware when they're setting their prices,” Krusing said.

But Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute, argues that some pharmaceutical companies he talks to are “very concerned about the impact of high deductibles on consumers' ability to afford prescription drugs.”

“I can't comment as to how (drugmakers) are addressing it appropriately,” Fronstin said, “but I know it's on their radar.”